London-based independent E&P company Panoro Energy is currently in disagreement with its joint venture partners in OML 113 license off Nigeria, which contains the Aje field. The company intends to initiate arbitration and legal proceedings ‘to protect its interests.’
The company, through its fully owned subsidiary, Pan Petroleum Aje Limited (PPAL), holds 6.502% participation interest in OML 113. The partners in the license are the Nigerian oil company Yinka Folawiyo Petroleum, the operator, New Age, Energy Equity Resources, and Jacka Resources.
Panoro informed on Friday that PPAL has received default notice from the Technical Advisor on behalf of the operator of OML 113 in relation to a disputed cash call that Panoro believes to be invalid due to an incorrect application of Joint Operating Agreement (JOA) provisions.
PPAL has received legal advice that the disputed cash call is baseless, and therefore there are no grounds to issue the default notice to PPAL purporting to hold PPAL in breach of its obligations under the JOA, the company explained.
“PPAL has asked the joint-venture partners to agree to rescind and cancel the claim for the disputed cash call and the purported default notice, but such undertakings and agreement have unfortunately not been forthcoming. Panoro is still proactively trying to resolve the issue in order to preserve shareholder value. At this stage, no agreement has been reached and no assurance can be given that any agreement will be reached,” Panoro said.
As the cash call and default notice remain in dispute, PPAL stated it intends to start arbitration proceedings pursuant to the JOA. Panoro added that in order to protect its rights prior to the beginning of the arbitration proceedings, PPAL has applied to the High Court in London, UK for interim relief in order to protect its rights under the JOA.
Panoro further said it will seek to recover all losses, costs, expenses, compensation and damages in law and equity caused directly or indirectly by the Joint-Venture Partners’ breach of their contractual and equitable obligations.
The company concluded it will also continue to take all necessary action to retain its equity participation in OML 113 and to preserve shareholder value.
The Aje field, discovered in 1997, is located in the western part of Nigeria in the Dahomey Basin. The field is situated in water depths ranging from 100 to 1,000 meters about 24 km from the coast. First oil production from the field started in May 2016. Oil produced from the field is stored on the Front Puffin FPSO which has production capacity of 40,000 barrels of oil per day and storage capacity of 750,000 barrels,